Investors and private equity lift deal activity in UAE healthcare industry

16 November 2021 2 min. read

The number of deals in the UAE’s healthcare industry has jumped in the first half of 2021, as providers consolidate to meet changing market conditions and investors flock to the sector in search of healthy returns.

The latest UAE Health Sector Pulse by global professional services firm Alvarez & Marsal has found that seven major deals were closed in the UAE between January and September this year, up from five for the full year 2020.

“Healthcare providers have typically focus on consolidation with the objective of capturing additional market share across multiple clinical specialties and catchment areas,” explained Karim Benhameurlaine, Managing Director and Head of Alvarez & Marsal’s Healthcare and Life Sciences practice in the Middle East.

Major UAE Healthcare by Asset Type

Sara Alom Ruiz, a Senior Director in the firm’s Healthcare and Life Sciences practice and also co-author of the report, added: “Healthcare deals in 2021 are characterised by more strategic deals with steady growth in tech-enabled healthcare. Healthcare groups are seeking to diversify business models by pursuing stakes in cloud-based services, virtual care and post-acute services.”

The rise of private equity

While healthcare providers have for long been responsible for the largest chunk of deals in the space (81% of transactions between 2016 and 2021 were provider acquisitions or mergers), the healthcare scene is increasingly catching the eye of investors. So far in 2021, investment funds have accounted for 58% of deals, up from 17% in 2016.

With the Covid-19 disruption propelling the healthcare sector to the epicentre of economies and societies, “more investment funds are attracted to the sector’s resilient earnings and long-term growth trajectory,” said Benhameurlaine.

Major UAE Healthcare Deals by Investor Category

Investors see potential to add value by either combining groups for capability building and portfolio diversification, or by optimising performance in areas which face “oversupply concerns.”

Notably, private equity firms are increasing their stakes in HealthTech offerings, as evidenced by the increasing share of late-stage investment. “Providers will increasingly find value in adopting HealthTech software such as artificial intelligence, analytics and cloud solutions to address critical issues and to improve workforce efficiency and process optimisation,” explained Ruiz.

Looking ahead, Alvarez & Marsal expects deal activity to remain bullish, with MedTech and telehealth among the hotspots in the short to medium term.